Mileage and Rewards Cards: Pros and Cons

You may know that they offer many benefits for loyal customers, but perhaps you aren't sure of all the mileage and rewards cards Pros and Cons. These cards offer a range of rewards from mileage points to defray the costs of airline travel to actual gifts selected from a merchandise catalog. While it’s fun receiving these rewards, there many factors that you should consider when selecting a mileage and reward card. Here are some of the pros and cons.

Pros 

Mileage rewards cards offer points that offset the cost of airline travel. Since this is the largest expenditure when travelling, it is no wonder that these cards have grown in popularity. The card works by offering a point for every dollar that you spend. Once you reach the qualifying amount of points, the credit card company grants you an airline ticket. These points generally carry over for a few years, so if you don’t meet the requirement the first year, you will still have a chance to redeem your points. Each card has a time limit, so check the redemption period to make sure.

Rewards cards work the same way as the mileage cards but offer various different incentives. Some cards offer cash back rebates based on your spending activity. Others offer actual merchandise from a catalog. For example, a gas rewards credit card offers a cash back rebate percentage which results in a reduction at the price you pay at the pump, while another card may give you points to purchase gifts from a catalogue.     

Cons

While everyone loves receiving mileage and rewards benefits, there are important things to consider. First, when you redeem your mileage points, you are flying as a stand-by passenger. Meaning if you choose to travel during peak times, you may have difficulty getting a seat on the plane. You may have to travel in the middle of the week in order to proceed with your vacation.  So this is not a spur of the moment activity and advanced planning is required. Rewards cards offer lots of incentives but they are encouraging additional spending. Most of these mileage and rewards cards also offer higher interest rates to offset the cost of the rebates, so the benefits you receive are not entirely free.

While mileage and rewards cards create an exciting way to spend money, you must always look at the bottom line. Spending more money with a higher interest rate or because you really want a reward does not make financial sense. Remember: this is your money, so spend it wisely.